Crosley Radio Corporation v. Dart

• Decision Date: 24 March 1947
• Docket Number: No. 10265.,10265.
• Citation: 160 F.2d 426
• Parties: CROSLEY RADIO CORPORATION v. DART.
• Court: U.S. Court of Appeals — Sixth Circuit

160 F.2d 426 (1947)

CROSLEY RADIO CORPORATION v. DART.

No. 10265.

Circuit Court of Appeals, Sixth Circuit.

March 24, 1947.

Fred Gerlach, of Chicago, Ill. (Fred Gerlach, of Chicago, Ill., and I. Joseph Farley, of Detroit Mich., on the brief), for appellant.

Ralph L. Chappell, of New York City (Ralph L. Chappell and Kenyon & Kenyon, both of New York City, and George McArthur, of Mason, Mich., of counsel; McArthur & McArthur, of Mason, Mich., on the brief), for appellee.

Before HICKS, SIMONS, and MILLER, Circuit Judges.

SIMONS, Circuit Judge.

The problem presented for solution by the appeal involves the interpretation of a written contract entered into by the parties to the present controversy, for the assignment of a patent application including the granting of an option to the purchaser for an exclusive license under other patents to be carved out of the parent application and to be made the subject of divisional applications. While no question of validity or infringement is here presented, decision nevertheless requires claim analysis and interpretation.

The inventor was the appellee, Dart. He had conceived an improvement in a door and its components, for iceless refrigerators. His general idea was that of a double-doored refrigerator with shelves on the inner door for storage of frequently used foods, a cutaway panel to permit access to the ice-cube chamber without exposing the rest of the box and a latching mechanism to permit opening the outer door independently or both doors simultaneously. On March 8, 1934, he had filed an application for his invention which listed six claims, to which, on June 13, 1934, three additional claims were added. All were combination claims including, as elements, not only the improved door but the conventional refrigerator with its cooling unit, a latching means, a cutaway portion of the inner door aligned with the ice-cube chamber and a specific type of hinge.

On April 12, 1935, Dart entered into a written contract with appellant Crosley, whereby he assigned his application to Crosley, but reserving therefrom "the features of the Dart invention which include the particular type of door latch, the particular type of hinge for the doors, and the particular type of cut-out inner panel or door as described in the copy of the application attached, as the prosecution of said application in the United States Patent Office appears to warrant." The consideration for this assignment was the payment of $1500 by Crosley to Dart and an undertaking by Crosley to prosecute at its own expense a divisional application previously prepared, upon which it was thought the reserved inventions would receive independent patent protection. The contract also granted to Crosley an exclusive license to use the claims of the divisional application upon the payment by Crosley of royalties at ten cents a unit. If the royalties did not reach $5,000 in any one year, Crosley was to reassign the divisional patent to Dart. The option was to be taken up, if at all, not later than six months after the issuance of a patent. A copy of the divisional application was attached to the contract, containing three claims covering a latch, a cut-out panel and a hinge, each in combination with "a refrigerator having a compartment formed between separately hinged inner and outer doors, and having a shelf storage compartment there between."

The status of the basic or parent application at the time of the agreement is important. Prior to its filing in the Patent Office, one Canton had, on November 2, 1932, filed an application involving the same general inventive concept, and on September 10, 1934, an interference had been declared between Canton and Dart and also between Dart and the application of one Zahodiakin. On January 15, 1935, Zahodiakin had assigned all his rights to Crosley.

At the time the agreement was entered into between Dart and Crosley, the firm of Allen and Allen, patent attorneys of Cincinnati, Ohio, were acting for Crosley. It was understood that they would prosecute the assigned application in the Patent Office. It was also understood that they would prosecute the divisional application for Dart but at Crosley's expense, and to that end Dart executed a power of attorney appointing Allen and Allen his solicitors, replacing Dart's original patent counsel. Allen and Allen proceeded with both prosecutions. As, by the phrasing of the assignment, it was expected, the claims of neither application were allowed as originally drawn. Amendments were from time to time made, claims were rewritten to meet objections of the examiner, claims were withdrawn and new claims added. It is, we think, unnecessary and would unduly extend this discussion, to narrate in full the Patent Office history. It will suffice at this point to say that on August 18, 1936, a patent No. 2,051,132, issued upon the original application, with the four claims printed in the margin.¹ While its prosecution was pending the Canton application was, on May 24, 1935, assigned to Crosley, and on September 30, 1935, Dart signed a concession of priority to Canton for claims 8 and 9 of his amended original application. They were then canceled from the Dart application and placed by Crosley in the Canton application. It is now contended that they covered the broad inventive concept of the Dart invention assigned to Crosley, and inferentially everything that Dart sold.

Meanwhile the divisional application was having harder sledding in the Patent Office. It was prosecuted by Allen and Allen with combination claims, including as elements the cut-out inner panel, the latch and the hinge. The claims were all rejected by the examiner as aggregative. The solicitors then canceled the claims which included the latch and hinge as elements, filed separate divisional applications for combinations which included the particular latch and the particular hinge as elements, and by amendment confined the original divisional to combinations including the cut-out inner panel. Each of the three divisional applications was vigorously prosecuted. After various rejections, argument, amendment, withdrawal of original and submission of new claims, the first divisional application became patent No. 2,122,680, and was turned over to Dart on July 5, 1938. Its claims were combination claims substantially as in the original divisional application made part of the assignment contract. The divisional application directed to the inclusion of the latch in combination, was rejected by the Patent Office; the claim was narrowed though still in combination, and was again rejected on the ground that the combination was fully covered by the parent patent. The solicitors then canceled the combination claims and inserted claims directed specifically to the latch. These were fought through to the Board of Appeals and eventually, in June, 1940, became patent No. 2,204,053, which was likewise turned over to Dart. The hinge application in combination was rejected. New combination claims were likewise rejected as identical with the claims of the parent patent, and a claim directed to the hinge alone, was rejected on prior art, with rejection sustained by the Board of Appeals.

Based upon history thus sketchily delineated, Dart's theory was that by amendments to the parent application upon which patent No. 2,051,132 issued, the solicitors obtained for Crosley combination claims which covered inventions reserved by Dart from his assignment to Crosley; that by so doing and by Crosley giving a license under the parent patent to Fairbanks, Morse and Company (later assigned to Philco), Crosley...